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According to the Ernst & Young global survey of attitudes to fraud and corruption, 15% of the senior executives of leading companies questioned would be willing to pay a bribe to win business. The figure is 13% higher in the Czech Republic. More than a third of respondents are convinced that corruption is widespread in their country. Czech managers are significantly more sceptical, with as many as 80% of respondents seeing corruption as widespread. However, there may be some self-delusion at play here, since only 12% concede that there is corruption in their own sector. The survey shows that top company bodies are not sufficiently prepared to confront the risks linked with fraud and corruption. Furthermore, those questioned do not believe the authorities are capable of seeing through prosecutions to the end, i.e. punishing the guilty party.
Though a global phenomenon, corruption is most widespread in rapid-growth markets. Bribes are most likely to be paid in Indonesia, Greece and China. In Europe, Greece has the dubious honour coming top, followed by Belgium and the Czech Republic. The CR is followed by Colombia, Poland and Ukraine.
The deliberate misreporting of financial statements is a significant risk in many countries. In Europe, the survey shows that this practice is most likely to take place in the Netherlands, Belgium and France, Czech managers claim that they would not knowingly cook the books under the pressure of financial indicators.
“Companies get into trouble by not detecting corrupt practices or fraud on the part of the seller, and this in turn puts them at risk of large fines and a reduction in the value of their investment,” explains Tomáš Kafka, Senior Manager, Fraud Investigation & Dispute Services, Ernst & Young.
In terms of instruments for monitoring compliance with anti-corruption legislation, Czech respondents, like managers elsewhere in the world, largely rely on internal audit and advisory firms. However, significantly fewer whistleblowing systems are used in the Czech Republic than the global average. And yet the survey shows that more than two thirds of Czech managers would welcome legislation which introduced financial incentives for whistleblowers.
“The CFO plays a crucial role in the prevention of fraud and corruption. In the past they were less active in promoting internal company ethical values. Today they need to redouble their efforts. They need to ensure that they themselves are trained so as to increase their awareness of the risks while clearly demonstrating support for anti-corruption initiatives,” says Tomáš Kafka.
Source: Ernst & Young, Czech Republic